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Memoirs of the Addams Administration 13.

Once upon a time, old people depended upon their savings and their families to cover the living costs of their few last years. Then, people started to live longer and the individual safety net eroded. We got Social Security. Once upon a time, the business cycle visited prosperity and hardship on people in varied measure. Then came the Great Depression. We got Keynesian counter-cyclical spending. Once upon a time, doctors couldn’t do much to cure illness. Then, the combination of science and medicine opened an Aladdin’s Cave of health solutions. These cost a lot of money, so we got Medicare and Medicaid. Once upon a time, America was a meritocratic society and poor people had to take their lumps. Then came the Sixties and Seventies, which altered assumptions. The Forgotten suffered in misery, so we got the Affordable Care Act (ACA).

Lots of people didn’t like the ACA. Moreover, the ACA has problems all its own. Those problems appear not to be fatal or crippling. The Congressional Budget Office (CBO) projects that, left to its own devices, the ACA will “naturally stabilize” in most of the country in a few years.[1] President Trump, or the Republicans in Congress acting without President Trump, can shove the ACA downhill if they want it to fail. They can do this most easily by just not enforcing the individual mandate. That would allow about 14 million younger-and-healthier people to drop out of the system. The loss of their premiums might fatally destabilize the ACA.

The first major step in the Trump Administration came in the effort to co-operate with the real Republicans in the legislature. Republicans campaigned against the ACA for seven years, then got the chance to repeal-and-replace.[2] In contrast to the Democrats’ year-long construction of the ACA and disciplined passage of the bill, the Republicans adopted a “Hey, we can put on a show, we can use my dad’s garage!” approach. The Affordable Health Care Act (AHCA) repealed the unpopular and nonsensical individual mandate, substituted limited age-related subsidies for open-ended income-based subsidies, and cut down the Medicaid expansion. Public opinion—especially among Trump’s core supporters—disliked the AHCA.

Well, that didn’t work. In the House the “Freedom Caucus” didn’t like it; in the Senate moderate Republicans didn’t like it. The two Republican factions could not agree, so the AHCA got pulled before a vote. (See: Face, egg on.) The ACA survived. Bitter recriminations ensued.

The stock market’s Trump Rally turned into a slump once the AHCA went up in flames like the Hindenburg. The botched handling of the bill’s passage revealed that the deep fissures inside the Republican Party during the Obama years have not been healed. It also raised suspicions that neither Trump nor House Majority Leader Paul Ryan have much understanding about how to manage their business. Those revelations, in turn, cast a pall over the prospects for the other elements of Trump’s agenda that have real relevance for business conditions. Tax cuts, renegotiated trade deals, infrastructure spending, and sweeping deregulation now seem in peril.[3]

Is the new “realism”/”pessimism” justified? It is if you ask Democrats, but less so if you ask Republicans. Having messed-up one thing right off the bat, Republicans have a strong motive to do better with the next project: tax reform.[4] They had the same motive to pass AHCA.

Democrats chortled that people like the ACA. The like Medicare/Medicaid and Social Security too. With defense, such entitlements are driving the growth of the deficit.

[1] “Obamacare: Will it collapse on its own?” The Week, 7 April 2017, p. 16.